PARSIPPANY, NJ, June 19, 2013 – Avoidable costs of more than $200 billion are incurred each year in the U.S. healthcare system as a result of medicines not being used responsibly by patients and healthcare professionals, according to a new study released today by the IMS Institute for Healthcare Informatics. This represents 8 percent of the country’s total annual healthcare expenditures and amounts to millions of avoidable hospital admissions, outpatient treatments, pharmaceutical prescriptions and emergency room visits for patients.

The report – Avoidable Costs in U.S. Healthcare: The $200 Billion Opportunity from Using Medicines More Responsibly – examines six areas that contribute to unnecessary costs: medication nonadherence, delayed evidence-based treatment practice, misuse of antibiotics, medication errors, suboptimal use of generics and mismanaged polypharmacy in older adults. Together, these areas lead to unnecessary utilization of healthcare resources involving an estimated 10 million hospital admissions, 78 million outpatient treatments, 246 million prescriptions and four million emergency room visits annually. The study found significant opportunities for improvement – to ensure that patients receive the right medicines at the right time, and take them in the right way.

“As our study makes clear, drugs are often not used optimally, resulting in significant unnecessary health system spending and patient burdens,” said Murray Aitken, executive director, IMS Institute for Healthcare Informatics. “Those avoidable costs could pay for the healthcare of more than 24 million currently uninsured U.S. citizens. Reaching a meaningful level of consensus and alignment among stakeholders, based on measured and proven success models, is a key step to unlocking the $200 billion opportunity identified in our study.”

The IMS Institute report, which updates existing published research, finds that progress is being made to address some of the challenges that drive wasteful spending in many parts of the U.S. healthcare system. Medication adherence among large populations of patients with hypertension, hyperlipidemia and diabetes has improved 3-4 percent since 2009. In addition, the proportion of patients diagnosed with a cold or the flu who inappropriately received antibiotic prescriptions has fallen from 20 percent to 6 percent since 2007. And, patients are now receiving lower-cost generic alternatives to branded medications, when available, 95 percent of the time.

The report’s key findings include the following:

Medication nonadherence drives the largest avoidable cost. Patients not adhering to their doctors’ medication guidance experienced complications that led to an estimated $105 billion in annual avoidable healthcare costs. While the underlying reasons for nonadherence are varied and longstanding, the growing use of analytics and collaboration among providers, pharmacists and patients appear to be advancing both the understanding and effectiveness of intervention programs.

Delays in applying evidence-based treatment to patients lead to $40 billion in annual avoidable costs. The study analyzed four disease areas where patients either are not diagnosed early or treatment is not initiated promptly. The largest avoidable impact is seen in diabetes, where such delays increased outpatient visits and hospitalizations. A reduction in this source of avoidable costs is possible if insurance coverage is expanded, and at-risk patients are able to receive appropriate screening and diagnostic testing.

Some signs of improvement are evident in the responsible use of antibiotics. The misuse of antibiotics contributes to antimicrobial resistance and an estimated $34 billion each year in avoidable inpatient care costs. An additional $1 billion is spent on about 31 million inappropriate antibiotic prescriptions that are dispensed each year, typically for viral infections. There are encouraging signs that efforts to drive responsible antibiotics use are paying off, particularly in the declining number of prescriptions for the common cold and flu – viral infections that do not respond to antibiotics.

Many efforts are underway to address the underlying causes of avoidable spending and to improve medication use. A large number of initiatives are advancing across the healthcare landscape, including novel interventions, critical assessments of established solutions and pioneering models of stakeholder cooperation. Many of these initiatives involve a greater role for pharmacists, an integrated approach to addressing patient issues, alignment of financial incentives, and greater use of healthcare informatics to guide decision-making and monitor progress.

The full report, including a detailed description of the methodology, is available at www.theimsinstitute.org. The report can also be downloaded as an app via iTunes. The study was produced independently as a public service, without industry or government funding.